How to start a business in South Carolina [Updated 2024]

According to the South Carolina Chamber of Commerce, 99.4% of the state's total businesses are small businesses—a true testament to the support the state of South Carolina gives entrepreneurs to encourage their business ventures. 

Preparing a business plan and securing funding is essential when starting your South Carolina business. However, this is just the launching point. To remain compliant, you must also ensure a proper business structure, stay up-to-date with tax filing requirements, and more.

Setting up a compliant business in South Carolina can be overwhelming with the state’s evolving regulatory requirements and confusing websites for online filings. Our step-by-step guide will help you navigate state-specific business rules and taxes so you can launch your South Carolina business stress-free.

1. Name your business

Some may say this is the most fun step, but choosing a name for your business is a significant milestone as a business owner. Your name represents your brand identity, so you’ll want to choose carefully. Here are a few tips for getting started:

• In South Carolina, businesses like corporations, limited liability companies, LPs, and LLPs must have a distinct name from any other business of the same kind registered with the Secretary of State's office. Ensuring that the name follows the state's rules is also crucial. South Carolina doesn't allow profanity or misleading words in business names, and certain terms like 'bank' and 'credit union' are not permitted.
• Do a business name search on the South Carolina Secretary of State website to confirm name availability and uniqueness from other business names. This is preliminary information, so double-check with the Secretary of State's office via phone. 
• Before finalizing your business name, search the US Patent and Trademark Office to ensure it’s not already trademarked.
• If you wish to secure your preferred business name before officially registering your business, you can apply for a name reservation. The Secretary of State allows you to reserve names for 120 days (for South Carolina LLCs and corporations) by submitting an application and paying a $10 filing fee.
• Create an account to register your new business entity. You can also do so by mail with these downloadable forms. There's a total filing fee of $135.
• Sole proprietorships and general partnerships aren’t required to register their name with the Secretary of State.

Now is the perfect opportunity to secure your social media accounts and register a domain name for your business website that matches your business name.

If you want to use a business name different from the one you registered with the state, you'll need to register a trade name. This is also known as a DBA or "doing business as." You should do this if you're a sole proprietor or a partnership using a business name that doesn't include your or your partner's name—or if your LLC, LP, or corporation uses a name different from the one you registered with. Remember that your DBA name must be different from all other registered business names.

2. Explore your funding options

Entrepreneurs have many options for funding their businesses—from bootstrapping to seeking investors or small business loans. South Carolina offers various funding opportunities to attract new businesses to the state. Here's where you can start looking for funding:

• South Carolina Coordinating Council for Economic Development. The Coordination Council for Economic Development has several grant funds for expanding enterprises throughout the state.  
• Small Business Administration (SBA). The SBA's South Carolina District Office offers state-specific resources such as funding programs, counseling, and certifications. Plus, they provide referrals to their partner organizations and lenders.
• Federal grants and loans. The federal government offers grant and loan programs targeted toward small businesses.
• Crowdfunding. If you're a business looking to try out your idea or product in the market, Kickstarter and Indiegogo can be useful platforms. 
• Angel investment. In South Carolina, there are many angel investors and venture capitalists who are on the lookout for promising startups. Check out firms like Venture South and Charleston Angel Partners, or pitch your startup at the Charleston Angel Conference.
• Bank loans and credit cards. Business owners often rely on traditional bank loans, but a business credit card can be a good option for short-term needs or to establish credit.

3. Decide on your business structure 

The next step in forming your business is deciding on the best type of structure for your business needs. In South Carolina, your business entity structure will determine many important things, such as tax purposes and the amount of personal liability you’ll have. Here’s some more information on each type of legal structure and business type:

4. Register your business in South Carolina

You don’t have to register with the state to start a sole proprietorship or general partnership in South Carolina. But if you choose any other business structure, you must register your business and pay a fee before operating in South Carolina. To learn about the specific details and costs for registering each type of business entity, refer to the table below.

5. Decide on a registered agent

In South Carolina, it’s mandated for every legal entity to have a registered agent. This person or entity is authorized to accept legal and tax documents on behalf of the business. The registered agent must be either a resident of South Carolina or the owner of the business. However, being your own registered agent may involve a lot of paperwork, and delegating to a third party may be a better option.

You can invest in a registered agent service to ensure that you receive essential documents promptly by forwarding your mail. Prices vary based on the level of service, speed, and length of engagement. Expect to spend around $100 to $300 a year.

6. Apply for an Employer Identification Number

If you plan to operate a business in the US, including South Carolina, you must obtain a federal Employer Identification Number (EIN). The IRS uses this nine-digit number to identify your business, much like a Social Security number. Getting an EIN is mandatory if you plan to hire employees, operate as a corporation or partnership, open a business bank account, or file specific federal and state tax returns. The good news is that obtaining an EIN is both fast and free. All you need to do as a small business owner is fill out Form SS-4 and submit it to the IRS.

7. Get up to speed with Business Tax Credits

Did you know South Carolina has one of the lowest corporate income tax rates in the Southeast, at only 5%? South Carolina offers several tax credits to promote business growth, job creation, and economic development. These credits can help reduce the tax burden of businesses that operate within the state. Here are some of the most popular tax credits:

• Job Tax Credit: Companies in South Carolina can get a financial reward for creating new jobs. This incentive can reduce up to 50% of their corporate income tax liability for several years. Companies must create and maintain a certain number of net new jobs in a taxable year to qualify.
• Investment Tax Credit: Manufacturers in South Carolina can receive a one-time credit of up to 2.5% of their investment in new production equipment against their corporate income tax if they locate or expand in the state.
• Research and Development Tax Credit: Businesses in South Carolina conducting qualified research and development can receive a credit of 5% on qualified expenses.
• Historic Rehabilitation Tax Credit: This tax credit is offered to businesses in South Carolina that restore historic buildings and amounts to 25% of the qualified expenses.
• Venture Capital Investment Tax Credit: Investors in South Carolina's venture capital funds can receive a credit of up to 20% of their investment, maxing out at $1 million.
• Angel Investor Credit: South Carolina angel investors can get a 35% tax credit for investing in early-stage, high-growth local businesses that create jobs.

South Carolina residents can also benefit from tax incentives like no state property tax, no inventory tax, sales tax exemptions that reduce start-up costs, or no local income tax. There’s a limit to how many you can use at once.

8. Stay on top of filing requirements and taxes

Unlike other states, most businesses and nonprofits in South Carolina aren’t required to file annual reports, except for C-Corps. LLPs require annual renewal through the Secretary of State’s office. However, businesses are responsible for paying state and federal taxes as the South Carolina Department of Revenue requires. In South Carolina, the amount of taxes a state business owes depends on its structure and operations.

In addition to yearly filing, businesses are required to stay on top of their state and federal tax returns. The state tax you pay will depend on the business structure you choose—you may be liable for income tax, sales tax, payroll tax, corporate tax, and more. Consider consulting a tax professional or the South Carolina Department of Revenue to comply with filing requirements and changing tax laws.

9. Find a payroll solution

If you’re hiring employees or contractors in South Carolina, there’s much to consider. First, you must classify them correctly to avoid being hit with a fine. When hiring, it's essential to become familiar with the salary history ban in Columbia and Richland County to avoid penalties—something that differs by state. Another thing? You should be aware of South Carolina’s overtime rules, which mirror federal regulations. For instance, if employees work more than eight hours a day or 40 hours a week, they are entitled to 1.5 times their regular hourly wage.

To ensure accurate and timely payment for employees and contractors, using payroll software that supports you through every step of the process is crucial. Rippling is an excellent solution to help you avoid the tedious manual work of running payroll and complying with South Carolina state laws. With Rippling Time & Attendance, you can automatically track your employees' hours and get notifications when someone approaches overtime. When the hours are approved, they'll sync seamlessly to payroll. With just one click, Rippling calculates net pay and taxes in seconds.

And if you’re also hiring globally, Rippling has that covered, too: 

• Pay all your employees in one pay run, even across different tax jurisdictions and currencies.
• Incorporate hourly and salaried employees, as well as contractors. 
• Easily oversee your workers, operations, and data across the globe from a unified platform.
• Operate with our Employer of Record without having to create an in-country business entity.

10. Support and scale your growing business with Rippling

As your enterprise continues to expand its operations in South Carolina and beyond, implementing a Human Resource Information System (HRIS) is a crucial step toward efficiently managing your workforce. HRIS software simplifies HR tasks, such as recruitment, employee onboarding, payroll processing, and benefits administration.

If you're looking to expand your business globally, it's a good idea to implement an HRIS early on. This can help significantly with your scaling efforts. Luckily, Rippling offers a complete solution for managing your global workforce in a single system.

• Whether your employees are based in Charleston or on the other side of the globe, you can seamlessly hire, pay, and manage them.
• Automate every facet of the hiring process and keep recruiting data up-to-date, including open positions and new hires.
• Consolidate all benefits into one integrated system, including health insurance, 401(k) plans, and commuter benefits.
• Easily streamline tasks such as onboarding new employees, managing benefit deductions, and administering COBRA benefits.
• Avoid local, state, and federal compliance issues.
• Gain access to HR analytics, policies, and other important information all in one reliable system.

FAQs about setting up a business in South Carolina

Do I need a business license in South Carolina?

In South Carolina, there is no statewide license requirement for small businesses. However, many municipalities and towns require a business license.

Do I need a business bank account when launching a business in South Carolina?

It's not required by law, but having a separate business bank account and credit card is recommended to simplify taxes and differentiate between personal and company assets. Also, having a business account is necessary if you’re planning to hire employees and need to process payroll. 

Do I need to get business insurance?

In the state of South Carolina, any business that has four or more employees, whether full-time or part-time, must have workers' compensation insurance. However, there are exemptions for casual employees and businesses that employ less than four people or have an annual payroll of less than $3,000.

Although it isn’t mandatory by state law, having a commercial space may require you to obtain general liability insurance to cover financial losses from property damage or injuries sustained on your premises. If you have an LLC and your business provides professional advice or services, having professional liability insurance can give you personal liability protection from negligence claims.

What are South Carolina’s state payroll taxes?

There are two state payroll taxes in South Carolina, in addition to federal payroll taxes: unemployment insurance tax and state income tax. Learn more about South Carolina’s payroll tax due dates and how to submit taxes.

Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.